Crude oil trims losses, boosting commodity currencies

Market Brief

As expected, the crude oil debasement, which was triggered by the failure of the Doha meeting, proved to be short-lived. The West Texas Intermediate erased almost completely Monday’s early losses as it bounced back slightly below the $40 threshold after hitting $37.61 at the opening. Similarly, the Brent crude filled the gap and returned at around $43. Gold was also buoyed this morning as it surged 0.60%. Silver was up 2.40%, platinum rose 1.20% and palladium jumped 1%. Finally, iron ore futures on the Dalian commodity exchange were up 2.40% after gapping higher at open.

In such an environment, commodity currencies were buoyed during the Asian session with AUD, NZD, NOK and CAD recovering significantly. The New Zealand dollar rose the most among the G10 currencies, rising 0.79% against the US dollar. NZD/USD broke the 0.6966 resistance (high from March 31st) and held ground above the 0.70 threshold, its highest level since mid-June 2015. The Kiwi has received a strong boost from the commodity rally and the improving risk sentiment, however we prefer to remain cautious as the country’s economic outlook is still uncertain as there is no clear evidence of a solid recovery.

The Australian dollar also continued to rally in overnight trading and finally broke the $0.7720 resistance to the upside. The pair is now heading towards the next resistance, which lies at 0.7849 (high from June 18th last year), and the release of the RBA’s minutes earlier this morning did not allow to cast a doubt on further Aussie’s strength as we found no solid evidence of an easing bias in the RBA’s minutes. The Aussie should continue to ride the positive trend as commodity strengthen further; however the pair is extremely vulnerable to renewed Fed rate hike expectations and negative signal from the Chinese economy.

On the equity market, most equity indices were trading in positive territory on improving risk sentiment. Japanese shares rose the most among the Asian markets with the Nikkei 225 and the Topix index surging 3.68% and 3.25% respectively. In mainland China, the Shanghai and Shenzhen Composite rose 0.21% and 0.28% respectively. In Australia, shares jumped 1.01%, while in New Zealand the S&ZP/NZX was up 0.32%.

Today traders will be watching ECB current account from the euro zone; ZEW survey from Germany (current situation expected at 50.8 and expectations at 8.0); housing starts and building permits from the US; today RBA’s governor Stevens will speak in New York and BoE Governor Carney will speak before the UK Parliament, while BoC governor will testify before the House of Commons Committee; PPI, unemployment rate, real wages and retail sales from Russia.

 

Global Indexes	Current Level	% Change
Nikkei 225 Index	16874,44	3.68
Hang Seng Index	21358,87	0.93
Shanghai Index	3040,079	0.21
FTSE futures	6312,5	0.12
DAX futures	10221	0.54
SMI Futures	8003	0.39
S&P future	2090,4	0.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Indexes	Current Level	% Change
Gold	1239,89	0.6
Silver	16,61	2.4
VIX	13,35	-1.98
Crude wti	40,19	1.03
USD Index	94,29	-0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Today's Calendar	Estimates	Previous	Country/GMT
UK Bloomberg April United Kingdom Economic Survey	-	-	GBP/07:30
EC Feb ECB Current Account SA	-	25.4b	EUR/08:00
EC Feb Current Account NSA	-	6.3b	EUR/08:00
EC ECB Bank Lending Survey	-	-	EUR/08:00
BZ Apr 15 FIPE CPI - Weekly	0,89%	0,94%	BRL/08:00
IT Feb Current Account Balance	-	-1068m	EUR/08:30
PO Bank of Portugal Governor, Finance Minister Speak on Banif	-	-	EUR/08:30
GE Apr ZEW Survey Current Situation	50,8	50,7	EUR/09:00
GE Apr ZEW Survey Expectations	8	4,3	EUR/09:00
EC Apr ZEW Survey Expectations	-	10,6	EUR/09:00
IT Bank of Italy Governor Visco Speaks Before Senate Committee	-	-	EUR/12:30
US Mar Housing Starts	1166k	1178k	USD/12:30
US Mar Housing Starts MoM	-1,10%	5,20%	USD/12:30
US Mar Building Permits	1200k	1167k	USD/12:30
US Mar Building Permits MoM	2,00%	-3,10%	USD/12:30
RU Mar PPI MoM	1,50%	-1,50%	RUB/13:00
RU Mar PPI YoY	0,00%	3,50%	RUB/13:00
RU Mar Unemployment Rate	5,90%	5,80%	RUB/13:00
RU Mar Real Disposable Income	-5,90%	-6,90%	RUB/13:00
RU Mar Real Wages YoY	-2,30%	-2,60%	RUB/13:00
RU Mar Retail Sales Real MoM	7,00%	-2,50%	RUB/13:00
RU Mar Retail Sales Real YoY	-5,10%	-5,90%	RUB/13:00
AU RBA Governor Stevens Speech in New York	-	-	AUD/13:30
UK BOE Governor Mark Carney Speaks in Parliament in London	-	-	GBP/14:35
CA Poloz and Wilkins Testify at House of Commons Committee	-	-	CAD/15:00
SK Mar PPI YoY	-	-3,40%	KRW/21:00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency Tech

EURUSD
R 2: 1,1714
R 1: 1,1465
CURRENT: 1,1332
S 1: 1,1144
S 2: 1,1058

GBPUSD
R 2: 1,4591
R 1: 1,4348
CURRENT: 1,4320
S 1: 1,4006
S 2: 1,3836

USDJPY
R 2: 112,68
R 1: 109,90
CURRENT: 108,93
S 1: 107,63
S 2: 105,23

USDCHF
R 2: 0,9913
R 1: 0,9788
CURRENT: 0,9627
S 1: 0,9476
S 2: 0,9259

 

 

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot